The Public Company Accounting Oversight Board has added Sweden to its slowly growing list of countries that have entered cooperative agreements to facilitate PCAOB oversight of audit firms located abroad.

The PCAOB has struck a cooperative agreement taking effect immediately with its counterpart in Sweden, the Supervisory Board of Public Accountants (RN) of Sweden, that enables both regulators to oversee auditors in one another's jurisdiction. The agreement provides a framework for joint inspections and allows for the exchange of confidential information between the regulators.

The PCAOB has reached similar agreements within the European Union with Finland, France, Germany, the Netherlands, Spain, and the United Kingdom. The board also has agreements in Switzerland and Norway, and with several regulators in North America, the Middle East, Asia and Australia. Major holdouts in cooperating with the PCAOB include China, Hong Kong, Ireland, Belgium, Czech Republic, Greece, Hungary, Italy, Luxembourg, Poland, and Portugal. The PCAOB lists on its website nearly 400 companies trading on U.S. exchanges whose overseas auditors have not been inspected because of legal challenges to the PCAOB's authority to regulate those firms in their home countries.

“The agreement with the Swedish RN confirms our shared commitment to strengthen the oversight of global audits and investor protection through cross-border cooperation," said PCAOB Chairman James Doty in a statement. "The PCAOB is highly focused on reaching cooperative arrangements with its counterparts in the remaining jurisdictions in the European Union and other parts of the world where the board currently is prevented from conducting inspections.”

The agreement with Swedish regulators also addresses protections around data for the audit firms, especially personal data related to individuals. Under Sarbanes-Oxley, the PCAOB was prohibited from providing information to non-U.S. regulators, but amendments to the act under Dodd-Frank give the PCAOB the ability to be more transparent and exchange such information with audit regulators in other countries.

In a separate development, a PCAOB member recently said he believes the board should demand greater transparency around audit firms even within the United States. PCAOB member Steve Harris said recently he believes at least the largest audit firms should be required to submit audited financial statements to the board and make them available to the public, as recommended several years ago by the Advisory Committee on the Auditing Profession.

The United Kingdom, the Netherlands, and Australia already require it, Harris said. "Many find it ironic that auditing firms in the United States, whose business is providing assurance about the transparency provided by others, resist publicly providing their own financial statements,” he said. “I see no apparent reason that the auditing firms that act as gatekeepers to our securities markets should not be as transparent to investors as the companies they audit.

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